Struggling Virginia Family Wrongfully Foreclosed By Chase

by Watts & Herring, LLC

The Washington Post has posted a distressing article about a family whose son was diagnosed with a terminal disease soon before their home was pushed into foreclosure by Chase.

Mike and Kathy Wales, from Prince William County, Virginia, say they fell behind on their mortgage payments last year after learning that their son had cerebral adrenoleukodystrophy, a terminal neurological disorder that leaves him unable to walk or see. Their other son has been diagnosed with ALD.

Mr. Wales admits they are at fault for getting behind, but says they were paying what they could each month and had even applied for a mortgage modification through Chase. The family was told they were approved for the modification, only to have Chase turn around and foreclose on their home just a few days later, selling the house to Fannie Mae. The Waleses are (understandably) very confused about why Chase was not willing to help them stay in their home after all the money the Obama administration has pumped into mortgage relief programs.

Chase sent them a notice stating they were in default on their mortgage, but it arrived when the family was in Minnesota for a medical emergency.

The Waleses had bought their 2,200-square-foot house for $415,000 in 2006, when prices were inflated and credit was easy. With a down payment of $5,000, a conventional mortgage and a 6.375 percent interest rate, their monthly payments are almost $3,300.

Until Alex’s emergency flight to Minnesota, they had been managing, Mike said.

After a missing a payment while Alex was hospitalized, they resumed paying but could send only $2,000 to $2,500 each month, they said. In May, Kathy called Chase to seek a modification but was told the family’s income was too high to qualify for the federal program, she said. By early June, they were nearly $11,000 in the hole. By the end of July, the bank had scheduled a foreclosure sale for Sept. 8.

In early August, Kathy contacted Chase to rule out the possibility of a short sale or filing bankruptcy, which they had already done in 2002. They weren’t pursuing refinancing since they were so overwhelmed with medical bills, so they began to discuss mortgage modification. They filled out and sent in the paperwork, but every time Kathy or Mike called to check on progress, they were told that something was missing from their packet.

Other people seeking assistance from the federal mortgage relief program also find themselves repeatedly sending the same information, said James Scruggs of Legal Services of Northern Virginia, which works with low-income families facing foreclosure in hard-hit Prince William and other counties.

“It’s still a difficult program for people to navigate,” Scruggs said.

On Aug. 11, the bank sent the Waleses a letter confirming receipt of the application.

On Sept. 2, they were told by a Chase representative that their application had been approved. The next day, they were told their new interest rate, 4.75 percent, and their new payment amount, $3,138.81. The foreclosure sale, scheduled for Sept. 8, had been put on hold, the bank representative said, and a packet with all of the paperwork would arrive by FedEx after the Labor Day weekend.

It didn’t.

On the day the postpones sale had been scheduled, Kathy saw someone checking out the house and she called Chase to ask about the modification paperwork that was supposed to have arrived by then. It was then she found out their application had been denied. A few days later a notice was posted on their door stating the house was now owned by Fannie Mae and they had ten days to respond to be eligible for relocation assistance.

If you have further questions or concerns, feel free to contact us through our website or by calling 205-879-2447. You may also obtain a copy of our free book on stopping wrongful foreclosures and the problems of hidden fees by emailing us.

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